No smelters in southern Africa possibly good news

Power supply constraints in South Africa meant that no additional aluminium smelting capacity was likely for at least 10 years, according to BHP Billiton’s chief executive.

“I cannot see any scenario where in the foreseeable future there is going to be any smelter construction in southern Africa,” said Marius Kloppers.

BHP Billiton, which controls the majority of South Africa’s smelters, has had electricity supply cut to 90 percent of normal operating capacity. Earlier this year, the diversified resources giant temporarily cut ties with is financier, Standard Bank, after the bank suggested it cut back on its planned smelter expansion in favour of more sustainable projects that made better use of the power available.

Platinum and gold mining has also suffered power-related setbacks, while Rio Tinto has put its controversial $3-billion smelter at Coega, a government-led development to industrialise around a new deep water port near Port Elizabeth, on hold.

Kloppers added that new power would not be available “for a long time” meaning that the current “capacity curtailment is probably going to continue”.

Commentators have suggested that South Africa’s power problems are not necessarily all negative as they give the country the opportunity to catch up with the efficiency of more developed nations, while encouraging less efficient power projects, like smelters, to reorganise elsewhere. This could help South Africa, which already suffers chronic unemployment, ensure a better between power usage per job ratio.